Average annual inflation will reach 2.6 percent this year and slow to 2.4 percent next year.This is shown by the Autumn macroeconomic forecast of the Ministry of Finance. According to her, the economy will record growth of 2.2% in 2024, which will rise to 2.8 and 3% respectively in the next two years, BNR reported.
The Finance Ministry predicts an increase in jobs, mostly in the service sector.The forecast published earlier in the week covers data up to November 15 and has a baseline and an alternative scenario of worsening performance, mainly due to dynamics in the external environment. In the baseline scenario, where inflation slows and the economy grows steadily, labour costs rise and are the leading contributor to the consumer price index, which will average 2.6 percent this year and slow to 2.4 next year. per hundred.
The simulation results, assuming geopolitical risks and more protectionist international trade policies, show that inflation could be higher than the baseline scenario by 1 and 0.5 percentage points in 2025 and 2026, respectively, and real GDP growth will be lower by 0.4 percentage points over the next two years.
Nominal GDP will be higher in 2025.due to the higher deflator, but in the period 2026-2028. will remain lower than the level in the baseline scenario, the Finance Ministry predicts.
The autumn forecast is extremely vital, as the estimates for next year’s budget are also based on it. His project has not yet been announced,but Finance Minister Lyudmila Petkova announced that it will happen next week.
Interview with Economic Expert on Autumn Macroeconomic Forecast
Editor (Time.news): Thank you for joining us today. The Autumn macroeconomic forecast from the ministry of Finance indicates an average annual inflation rate of 2.6% this year, dropping to 2.4% next year. How significant are these figures in the context of our current economic climate?
Expert: Thank you for having me. these inflation rates reveal a modest yet vital stability in our economy. A decrease in inflation can boost consumer confidence, encouraging spending and investment. The forecast suggests that while inflation remains a concern, the trajectory indicates that we may be moving towards a more predictable economic surroundings.
Editor: The report also predicts economic growth rates of 2.2% for 2024, increasing to 2.8% and 3% in the following years. What factors contribute to these anticipated growth figures?
Expert: Strong growth can be attributed to several factors. Primarily, we expect a rise in jobs, especially within the service sector, which is likely to drive domestic consumption. Additionally, stable inflation rates mean that labor costs will rise—the leading contributor to the consumer price index. This situation, if managed correctly, can fuel further economic expansion.
Editor: The report outlines a baseline scenario of steady growth, but it also introduces an alternative scenario where external economic conditions worsen. How might geopolitical risks and protectionist trends impact our economy?
Expert: That’s a critical point. In the alternative scenario, we could see inflation rates exceeding the baseline by 1 and 0.5 percentage points by 2025 and 2026, respectively. Additionally, real GDP growth might decrease by 0.4 percentage points over the following two years. Such dynamics could stifle consumer spending and investment if businesses face increased costs and uncertainties in trade.
Editor: It truly seems that the nominal GDP may remain higher in 2025 due to a greater deflator but lower than the baseline scenario between 2026-2028. What does this mean for businesses and consumers?
Expert: For businesses, this situation indicates a need for adaptability. While nominal GDP might appear favorable due to inflation, lower growth in total output can mean reduced consumer purchasing power. Companies should focus on efficiency and innovation to maintain profit margins. For consumers, it emphasizes the importance of budgeting and understanding that while nominal income may increase, real purchasing power could lag behind.
Editor: The Autumn forecast is critical for setting next year’s budget. What practical advice would you give to stakeholders as they prepare for this upcoming fiscal year?
Expert: Stakeholders should closely analyze the forecast’s implications. Businesses should prepare for potential fluctuations in labor costs and consumer spending. Additionally, policymakers need to adopt flexible strategies to address potential economic shifts and emerging geopolitical challenges. Staying informed and agile will be paramount in navigating the complexities of the next few years.
Editor: Thank you for sharing your insights. as we look ahead, what key takeaway should our readers focus on regarding the macroeconomic outlook?
Expert: The key takeaway is the importance of adaptability. Both businesses and consumers must remain vigilant and responsive to the economic signals,particularly those concerning inflation and growth patterns. Understanding the economic landscape will empower stakeholders to make informed decisions in a possibly volatile environment.
Editor (Time.news): Thank you for your valuable outlook. We appreciate your time and expertise in unraveling the complexities of the Autumn macroeconomic forecast.
Keywords: Autumn macroeconomic forecast, inflation, economic growth, labor sector, geopolitical risks, consumer spending, budget preparation, nominal GDP.